The 111th Congress passed a two-year extension of the estate tax at 35% with a $5 million exemption.
Estate taxes hurt small family businesses, such as those within the convenience and petroleum retailing industry (more than 70 percent of NACS members own 10 stores or fewer). The estate tax also destroys the ability of a family-owned business to remain within the family and be passed on from one generation to the next. Small retailers must divert resources from productive uses to engage in financial planning designed solely to avoid punitive taxation. The death tax discourages savings and investment. The threat of a 45 percent to 55 percent tax discourages continued investment in a family retail business. Not only is this a perverse incentive, it punishes a lifetime of success.
NACS supports full and permanent repeal of the estate tax. However, the Board of Directors recognizes that this may not be politically feasible. Therefore, NACS has pro-actively supported permanent reform that would set the tax rate at 35 percent and provide an exemption of $5 million per person. If an additional extension or permanent reform is not enacted in 2012, the estate tax is scheduled to return January 1, 2013 at a rate of 55 percent with only a $1 million exemption.
Several members of the 112th Congress have drafted legislation to either fully repeal the estate tax or to create a permanent estate tax. Unfortunately, with limited tax provisions moving forward currently, it looks as though any reform of the estate tax will be handled during a lame duck session after the November elections.
Contact your member of Congress and let them know that until the estate tax is permanently repealed, it will continue to hurt small businesses.